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Japan's love of tiny cars sore spot as Trump, Abe meet

By Naomi Tajitsu, Norihiko Shirouzu and Bernie Woodall

REUTERS

 

Japanese Prime Minister ShinzoAbe and his wife Akie Abe arrive ahead of his meeting with U.S. President Donald Trump at Joint Base Andrews, Maryland, U.S., February 9, 2017. REUTERS/Joshua Roberts

 

TOKYO/DETROIT (Reuters) - When Japanese Prime Minister ShinzoAbe meets on Friday with U.S. President Donald Trump, Japan's bulging automotive trade surplus will be a sore spot, but the path to balancing auto exports and imports will be no easier than it was in the 1980s.

 

Trump may press Abe to do more to level the trade imbalance with Japan during a White House visit or a round of golf,. But the two leaders are unlikely to change the fact that the big cars and trucks that America makes do not sell in Japan.

 

Many Japanese consumers, faced with congested cities, favor tiny domestically-made vehicles, called kei cars, which make up more than a third of the market. Priced from around 1.1 million yen, or about $9,800, these cars have engines most Americans would consider inadequate for a motorcycle.

 

Even Japan's Toyota Motor Corp <7201.T> and Honda Motor Co <7267.T> cannot convince Japanese consumers to buy models that are popular in the United States. Small sport utility vehicles such as the Toyota RAV4 and Honda's CR-V are seen by Japanese consumers as too big.

 

Only about 13,000 vehicles from U.S. automakers sold in Japan in both 2016 and 2015, and of that about three-fourths were Jeep SUVs made by Fiat Chrysler Automobiles <FCHA.MI> <FCAU.N>. Ford Motor Co <F.N> announced last month that it is pulling out of the Japanese market entirely, after selling just 2,400 vehicles there in 2016.

 

The Japanese auto market has shrunk not only in terms of vehicle size, but in sales volume. As a result, global automakers, including Japan's, are focused on boosting sales in China, the United States and growing emerging markets.

 

"It would take a painstaking fine-tuning of vehicle specs to suit American cars to those driving and other conditions and develop a strong distribution network to be able to gain traction in Japan. It is nothing short of a 20-year effort," said a Toyota executive who spoke on condition he not be named.

 

Jaguar Land Rover Japan Ltd Chief Executive Magnus Hansson said the low sales of U.S. cars in Japan did not mean it was a closed market, but rather reflected "a total and absolute lack of effort over 50 years" by Detroit.

 

Still, Japan remains an export hub for the big Japanese automakers. The U.S. Commerce Department this week reported that the U.S. trade deficit with Japan in 2016 was $68.9 billion, and of that total surplus, some $52.6 billion was in vehicles and automotive parts.

 

Japan's automakers have more than 90 percent of the Japanese market. Last year U.S. automakers controlled only 45 percent of their home market, the world's second-biggest after China.

 

A bigger factor than imports in the Detroit automakers' loss of U.S. market share since 1980 is the surge in investment by Japan's automakers in U.S. factories. Last year, 56 percent of the vehicles Toyota sold in the United States were made in America, the company said. Toyota said it employs more than 34,000 in the United States.

 

For years the growth of Japanese-owned auto factories in the U.S. heartland has helped cool trade tensions.

 

But Trump, a Republican, has turned up the heat by complaining about the trade surplus and accusing Japan of manipulating the value of the yen to disadvantage American-made goods.

 

On Thursday, a bipartisan group of senators from auto manufacturing states called on the new president "to address currency manipulation and auto-related non-tariff barriers.”

 

They are not alone in urging changes to help bolster U.S. business.

 

"(Trump) must bring Abe up short on any cheery notion that business will continue as usual," said Kevin L. Kearns, head of the U.S. Business and Industry Council.

 

The group represents smaller U.S. manufacturers, many of which feed the U.S. auto industry.

 

For a graphic on U.S.-Japan auto trade wheels into the spotlight, click - http://fingfx.thomsonreuters.com/gfx/rngs/AUTOS-TRADE-USA-JAPAN/010031TH45K/index.html

 

(Reporting by Naomi Tajitsu, Norihiko Shirouzu and Bernie Woodall; Editing by Joseph White and Tom Brown)

 

-- © Copyright Reuters 2017-02-10

 

[scorecard]

Go for it donald duck, tell the Japs, in their face, they have to like big cars.

[masuk]

2 hours ago, scorecard said:

Go for it donald duck, tell the Japs, in their face, they have to like big cars.

What does gasoline cost per litre in the USA?

[Prbkk]

Abe is making a play for leading the conga line of suckholes; the problem is if he looks over his shoulder, he's on his own.

Edited February 10, 2017 by Prbkk

[retarius]

Trump appears to have cloth ears as well a lack of analytical skills. If the world wanted 5.0 liter Mustangs thy would sell well. Or Suburbans. The world don't want these cars and so don't buy them.

 

I had the stupidity to buy a Ford s opposed to a Japanese car 3 years ago. I foolishly bought a Ford Fiesta instead of a Toyota Yaris. The six speed auto gearbox on the Ford is plagued with trouble. I have had it fixed twice and it apperas to be an unfixable problem…just a really poorly designed gearbox that Ford doesn't want to compensate owners far.

 

I am trying to sell the car to some other poor sucker so that I can but a decent car designed in Germany, Japan, France or even Britian for goodness' sake.

[Grouse]

Jaguar Land Rover Japan Ltd Chief Executive Magnus Hansson said the low sales of U.S. cars in Japan did not mean it was a closed market, but rather reflected "a total and absolute lack of effort over 50 years" by Detroit.

 

If Trump wants to turn around Detroit, build better cars. It's not size. It's not consumption. It's quality, engineering and style!

Edited February 10, 2017 by Grouse

[mlmcleod]

Alas, small cars come with a small price!  American auto makers want to sell monsters for $80,000 not a tiny car for $10,000!!  Gas is still priced by the gallon in the US, not by the liter like the rest of the world.  Profit rules in the US so cheaply constructed cars sold at high prices will always dominate the market there.

 

Don't get mad, it is just my opinion!

[Grouse]

8 minutes ago, mlmcleod said:

Alas, small cars come with a small price!  American auto makers want to sell monsters for $80,000 not a tiny car for $10,000!!  Gas is still priced by the gallon in the US, not by the liter like the rest of the world.  Profit rules in the US so cheaply constructed cars sold at high prices will always dominate the market there.

 

Don't get mad, it is just my opinion!

Not real gallons. Little ones ?

 

A real Range Rover (not a sport) will cost you 200k USD! 

 

All Japanese housewives have one!

Edited February 10, 2017 by Grouse

[hansnl]

1 hour ago, retarius said:

Trump appears to have cloth ears as well a lack of analytical skills. If the world wanted 5.0 liter Mustangs thy would sell well. Or Suburbans. The world don't want these cars and so don't buy them.

 

I had the stupidity to buy a Ford s opposed to a Japanese car 3 years ago. I foolishly bought a Ford Fiesta instead of a Toyota Yaris. The six speed auto gearbox on the Ford is plagued with trouble. I have had it fixed twice and it apperas to be an unfixable problem…just a really poorly designed gearbox that Ford doesn't want to compensate owners far.

 

I am trying to sell the car to some other poor sucker so that I can but a decent car designed in Germany, Japan, France or even Britian for goodness' sake.

The Fiesta is designed in Köln, by Ford Germany, the gear is designed by ZF in Germany and the engine probably comes from the combined PSA/Citroen, Ford factory.

Did you maybe hear about the problems Merc and BMW had with their automatics?

And Toyota? (Brakes, autoboxes, electronics)

All car factories nowadays buy their components from specialised suppliers.

 

[elgordo38]

7 hours ago, Prbkk said:

Abe is making a play for leading the conga line of suckholes; the problem is if he looks over his shoulder, he's on his own.

Love this one. Yes Abe has taken his checkbook to the US with promises to invest another 3 billion. That will give the Donald some bragging rights. The Donald and the car companies have to also realize build it and they will come. I presume gas prices are higher there and watching NHK TV the streets are definitely smaller/narrower. Each country has a different taste in automobiles and you just cannot ram these big "Kings of the road" down the Japanese throats. Decades ago Japanese realized that the west did not want their junk watches so they changed and made quality watches and turned the tide. I am impressed with Japanese culture love NHK English. 

[Ulic]

It is really simple but the big boys in Detroit just will not listen. Build a car that

the Japanese want, at a price they are willing to pay and you will get sales.

A tough market with slim profits to be sure but telling people they must buy

what you want to make/sell at prices 4-5 times what people want to pay is

even a tougher sell. Even the Japanese can't sell its own successful North

American winners in Japan. I shake my head.

[elgordo38]

8 hours ago, Ulic said:

It is really simple but the big boys in Detroit just will not listen. Build a car that

the Japanese want, at a price they are willing to pay and you will get sales.

A tough market with slim profits to be sure but telling people they must buy

what you want to make/sell at prices 4-5 times what people want to pay is

even a tougher sell. Even the Japanese can't sell its own successful North

American winners in Japan. I shake my head.

I notice a lot of those big 4 door IZUZU and TOYOTA'S pickups here in the narrow streets in most Thai cities. Do they just make them for export. They are as big as the big clunkers that America is trying to get the Japanese to buy. Besides a dedicated nationalism the Japanese are a savvy people. They never fail to impress the H out of me living on a tight little island prospering with sooo many natural disasters. 

[masuk]

On 11/02/2017 at 0:06 AM, mlmcleod said:

Alas, small cars come with a small price!  American auto makers want to sell monsters for $80,000 not a tiny car for $10,000!!  Gas is still priced by the gallon in the US, not by the liter like the rest of the world.  Profit rules in the US so cheaply constructed cars sold at high prices will always dominate the market there.

 

Don't get mad, it is just my opinion!

The rest of the world does NOT have liters.   We have LITRES.      Only the USA mis-spells litres.

 

Anyway, the US gallon is 3.75 litres.    Ye olde Imperial gallon is 4.5 litres.